Land in Melbourne a boost for SP Setia
KUALA LUMPUR : SP Setia Bhd (SP Setia) has acquired a piece of 850 square meter (sq m) land in Prahran, Melbourne Australia for A$10 million.
According to MIDF Amanah Investment Bank Bhd’s research (MIDF Research) noted the Company intends to develop the land into a high-end residential project with a GDV of A$38 million.
“We gather that the project will consists of eight-storey building with 47 apartments and an office, and retail outlets on the ground floor. Prahran is located 4.5km southeast of the Melbourne central business district (CBD),” said the research house.
Previously, SP Setia has acquired three pieces of land in Melbourne. In 2009, the property developer purchased a 0.2 hectares (ha) Fulton Lane site for A$30 million and developed it into luxury apartments with a GDV of A$470 million.
This is followed by acquisition of 0.9ha land at Parque. The third land bought is the 0.51 acre Carnegie land with a price of A$6.68 million transacted in Nov-2015.
Valuation works out to be A$1,093 per sq ft and we think this is fair noted MIDF Research.
“Although the valuation is higher than SPSETIA recent purchase of Carnegie land transacted at A$301 per sq ft, we believe that the premium is justified due to the better location of Prahran,” it added.
Note that Prahran and Carnegie are 4.5km and 14.2 km away from Melbourne CBD respectively.
“The company did not provide the timing of launch. However, we think that it will take between one to two years before the launch.
“While this should contribute to FY17 sales, the earnings impact should kick in much later due to completion method recognition practiced in Australia.”